Parkland Corp. shareholder Engine Capital LP, which owns about 2.5% of the convenience and fuel company’s outstanding shares, said in a recent letter to the Parkland’s board of directors that it is “very concerned” about the recent departures of two of its board members.
Marc Halley and Michael Christiansen, both board members who were picked by Parkland’s largest shareholder Simpson Oil Ltd., departed from the board in January.
- Parkland USA is No. 37 on CSP’s 2023 Top 202 ranking of U.S. convenience-store chains by company-owned store count.
In the letter, dated Tuesday, Engine Capital said while the reasons for the departures were not clear, Engine Capital believes that Simpson’s Jan. 3 news release provides shareholders with a “troubling indicator.”
It went on to quote the Simpson Oil release: “Simpson Oil remains committed to the core energy industry and will continue to invest and participate in companies in the industry that adopt strong corporate governance practices and prioritize the interests of shareholders.”
This implies that “this is not the case at Parkland,” Engine Capital said. “In all likelihood, the Simpson press release signals that Parkland’s single largest shareholder is very concerned with the board’s commitment to strong corporate governance and questions its focus on prioritizing the interests of shareholders.”
Engine Capital then encouraged the Parkland board to work collaboratively with its largest shareholders on “an orderly boardroom refreshment focused on attracting individuals who possess strong track records of value creation and relevant industry experience.”
It also accused the board of having little interest of listening to the viewpoints of its large shareholders, and of trying to use legal strategies to “shield itself from shareholder accountability.”
Parkland’s recent shareholder communication highlights the board’s “lack of sophistication and how out of touch with reality it is,” Engine Capital said, pointing out conflicting information between the press releases put out by Parkland Corp. and Simpson Oil following Halley and Christiansen’s departures.
Parkland’s board lacks the governance pedigree and financial sophistication to effectively oversee Parkland, Engine Capital said. There is also limited retail and merchandising experience on the current board, despite the fact that growing the merchandising side of Parkland is a key driver of future value creation, it said.
Engine Capital said the board should collaborate with its largest shareholders to reconstitute the board “with a number of directors that have a strong track record of shareholder value creation and who will prioritize the interests of all shareholders. A newly refreshed board with the experience we envision will be far better equipped to maximize value for Parkland’s shareholders and close the meaningful valuation discount that continues to exist.”
Parkland Corp. allowed Simpson Oil to name two nominees for election to Parkland’s board of directors in March. The announcement came on the same day that Engine Capital, asked the fuel and convenience-store company to consider selling or spinning off its non-core assets, which it later did. At the time, Parkland Corp. wouldn’t comment on whether the two instances were related.
New Board Member
On Tuesday, Parkland Corp. announced the appointment of Michael Jennings to its board, effective Feb. 10.
"Michael is a seasoned chief executive officer and board member with over three decades of international integrated energy experience. We are delighted to welcome him to our board of directors," said Steven Richardson, chairman of the board. "Michael brings extensive executive and public board experience. His track record as a CEO underscores his industry knowledge and strategic acumen. Our board and Parkland's shareholders will benefit greatly from his expertise as we advance our strategy to deliver long-term value to all shareholders."
Jennings worked for nearly two decades with HF Sinclair Corp. and predecessor companies Holly Frontier and Frontier Oil. Like Parkland, the companies provide petroleum products and renewables across the United States, Canada and Europe and have extensive transportation and storage infrastructure, Parkland said.
As CEO of HF Sinclair, Jennings led large-scale operational and financial integrations, delivered significant growth and enhanced shareholder value, Parkland said.
“Mr. Jennings' appointment forms part of Parkland's ongoing and strategic Board renewal process,” Parkland said in a statement.
Parkland Corp., Calgary, Alberta, is the parent company of Parkland USA, which has c-stores under several brands, including On the Run.
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